Apply cross-cultural management learning and theory to a real world case study to demonstrate the ability to critically reflect on cross-cultural management literature, critically evaluating how cultural considerations and cross-cultural interactions affect and influence the management decisions of a local organisation. You will also demonstrate your ability to work effectively as a multicultural team by delivering a presentation of your collaborative findings across your range of local organisations.
The Kawerau Dairy and its Cultural Connections
Cross cultural management has gained great importance lately due to its significance in influencing business operations worldwide. Increased globalization, international trade expansion, and continual immigration has resulted into people of diverse cultural background in several work places. Therefore, cross cultural management becomes essential for every international organization that intends to have a competitive edge in a foreign country. It’s important for the management team to understand the culture of the host nation so that they may know how to handle any conflict that may arise. This paper, therefore, discusses the Kawerau Dairy, the iwi organization in New Zealand (NZ) and how it relates with the Maori and Japanese culture putting into consideration cultural dimensions and factors.
Kawerau Dairy in New Zealand and Japan (Maori and iwi organization)
Kawerau Dairy is formed through a collaborative effort of 11 Maori Bay entities and Imanaka Cedenco Dairy unit which is a Japanese business owned by a 137-year-old family. These entities together hold 66.66% (2/3) venture in the Kawerau Dairy while the remaining 33.33% (1/3) is owned by the Imanaka Cedenco Dairy Ltd. The partnership of the Japanese food company (Imanaka) and the Maori Bay entities aim at providing high-value niche products at the Kawerau Dairy Plant. Together, these organizations seek to offer value to stakeholders using a cultural lens of kiwi ingenuity, Japanese perfection, and Maori connectivity (Carey, 2018). For a symbiotic relationship to be achieved between these diverse communities holding different cultural values, people need to understand the significance of cross cultural management (Ashley, 2018).
Geothermal milk produced by Kawerau Dairy
The Kawerau Dairy Group produces milk protein concentrates, butter, and organic whole milk. The plant uses geothermal energy to turn sheep, goat, and cow milk into powder, thereby making vitaminised powder, baby formula, protein powder, and aged-care formula. They expect to process about 30 million liters of milk in the first year with milk coming from nearby farms. The second geothermal project is nearing completion and is estimated to start operations this coming July. Jones, the project manager says that the plant will be different from other milk processing plants in New Zealand. It will consist of two driers processing goat, sheep, and cow plant based milks. A 750kg drier for cow milk has been built while the other drier for sheep and goat milk is underway.
To understand how the cultural dimension of these two countries differ or relate, the Hofstede cultural dimension theory will play a significant role in giving essential insights. Hofstede describes the culture of a country to differ from the other in five aspects; Power distance, Uncertainty Avoidance, Short-term versus Long-term Orientation, Femininity versus Masculinity, and Individualism versus Collectivism (Hofstede, 2010).
Cultural Dimensions in Japan and New Zealand
Figure 1: (Source: Country comparison, Hofstede insights, 2019)
Power Distance Index (PDI)
This dimension articulates the manner in which the power is distributed in the community. Generally, power is distributed unequally within a society, but the degree of distribution varies one nation to another (Yoo, Donthu, & Lenartowicz, 2011). Japan has a higher PDI of 54 compared to New Zealand that has 22. This means that power in Japan has a higher dispersion of power distribution compared to the New Zealand people.
Example of Power Distance Index
Business decisions in Japana are made by the top management. For instance, the Cedenco managing director categorically stated that they expect the merger to benefit from them given their experience in food processing industry. Since they already own mussel and vegetable processing operations in NZ, they expect other staff to consult them for through their existing links they are able to connect them with the outside market in China, US, and Japan. On the other hand, the NZ managers believe in all people having an equal share in the operations of the management (Solaja, Idowu, & James, 2016). They involve the employees by explaining to them what they ought to do. Jones, the Chief director of the Kawerau Dairy keeps explaining to his employees and the community on their key drivers, agenda to develop infrastructure, and how they will create jobs. From this discussion it is evident that power lies hugely on the top management in Japanese organizations while in NZ, power is distributed almost equally amongst the people.
According to Hofstede, the focus for the long-term orientation is on the future. It may require delaying the short-term gratification so as to achieve a long-term success. The management engage in making long-term goals and objectives that will bring greater turn-over in the long run (Merkin, 2018). In the Long-term orientation, Japan scores high by far compared to New Zealand at 88 and 33 respectively. This means that Japanese people take a more pragmatic approach while NZ people take caution while engaging in a new activity. They prefer to maintain their norms and traditions as they carefully analyze the intended change with suspicion.
Example of Long-term orientation
The management team of the New Zealand Kawerau Dairy seem to be very cautious in their dealings. For instance, Richard Jones (Chief Executive Officer) stated in one of the interviews that they need to get more involved in the process, know how things are run in the entire value chain, and gain more experience. He said they need to take things slow until they are sure they can go down the road of producing organic products over time (BusinessDeck, 2018). However, the Japanese counterparts seem very excited about their new investment. Japanese are not scared to engage in high rate investment no matter the economic status of the world. They believe in the durability of the company. During the negotiation process, Tim Chrisp, the managing director of Japanese Cedenco Foods in NZ stated that they were pleased for the opportunity given to partner with other entities of Kawerau Dairy. That they were looking forward for a long-term relationship with the Kaweeau Group.
Importance of Cross Cultural Management
Due to the increasing rate of globalization, there is a high degree of integration of people from different cultures in workplaces. Cross cultural understanding and communication, therefore, becomes crucial for every employee.
Low-context culture versus High-context culture
Japan is a high-context culture that relies on the use of non-verbal cues for communication. They rely mostly on the context, traditions, and personal relationships to interpret messages. On the other hand, NZ is a low-context culture that relies on the verbal communication to pass information. It is important to understand that communication is key in every negotiation process (Groves, Feyerherm, & Gu, 2015).
Example of Low-context culture versus High-context culture
The NZ staff at the Kawerau Dairy are known to use direct style of communication. This is seen when Jones, the director is explaining the company’s agenda to the people. He tells them directly what the company is expected to make and their next move. For instance, he explains that the first stage requires investment between $ 25m-$27m while the second stage between $15m-$17m. On the contrary, Japanese use indirect style of communication during the negotiation process. They do not directly explain what they need or expect. For instance, the managing director of Imanaka indirectly insinuated that they have a great influence on the company since they have other dairy products investments in NZ. Therefore, the importance of cross cultural management is key as it will prevent misunderstandings (Chang & Lin, 2015) among the groups.
Confucianism, Social harmony, and traditional values
The Japanese can be regarded as Confucian traditions that have dysfunctional and inconsistences in their ethical managerial behavior (Truong, Hallinger, & Sanga, 2017). Japanese put more emphasize on the family as compared to the society. On the contrary, the NZ people follow ethical moral basis that govern the society (Kimura & Nishikawa, 2018). They emphasize more on the social harmony compared to family. They want to achieve a common good for the whole society.
Example of Confucianism, Social harmony, and traditional values
This can be illustrated so well by the fact that Kawerau Dairy is formed through a collaboration of 11 Maori Bay entities while Imanaka Cedenco Dairy unit is a family owned Japanese business. Japanese seek their own good. Investing in Kawerau Dairy is aimed at achieving good returns for their money. On the contrary, the reason behind NZ merging the entities was for the common god of all and the society at large.
The Mana principle illustrates how power, prestige, authority, control, and influence are interconnected yet dependent on each other. The Mana enhancement started in NZ in the year 2007. They were trying to find out how they could manage some of the extreme behaviors shown by the students in schools (Te Ara, 2019). The holistic approach involves engaging other cultures in working towards achieving effectiveness in work places. Mana enhancement is taken as a model of practice that works to enhance restorative practice in the society. They ensure that people interact with each other peacefully in their jobs. It leads to positivism that increases motivation in jobs and satisfaction (Rangihau, 2017). Through Mana enhancement, the Kawerau Dairy staff and other workers are taught the need to respect other people’s culture and values. This means that the Japanese employees will feel welcome in NZ and the conducive environment created will act as a foundation through which they can engage in making decisions together.
The Maori culture though which this idea of Mana enhancement originated, aims in conducting business that is friendly to the indigenous people as well as the foreigners. Through Mana enhancement, they want to restore the cultural values, traditions, and cultural identity of the Maori people. Also, they focus on carrying the business on the scales of truth, honesty, trust, and loyalty with their partners, customers, and stakeholders (Phillips, 2016). Therefore, the Mana enhancement principle offers the staff of Imanaka Cedenco Dairy a conducive working environment through which they can work together in growing the merged organization to greater levels. Mana enhancement practice is concerned for the good of self and for the people around you. The only disadvantage this model has is allowing the Japanese managers and other employees to make the ultimate decisions of the organization. Since the Maori are supposed to show utter respect for the foreigners they might feel obliged not to respond or ask questions when Japanese senior staff make decisions that are wrong (Mika, 2014). Therefore, the Kawerau employees need to be careful on how they use the Mana enhancement principle while interacting with their Japanese counterparts.
Decision-making is an integral part of business management. Proper decisions will lead to success of the organization while poor decisions will lead to failure of the organization. Given the merger between Kawerau Dairy and Imanaka Cedenco Dairy involves two organizations from different cultural backgrounds, proper thought should be given on the decision-making process of the company since it will influence its outcome (Tjosvold, 2017). In this section, we focus on how the cultural dimensions and factors that influence the decision-making process of the merger.
Significance of power distance index in decision-making process
Since Japanese show high power distance index (52), they tend to rely more on the decisions made by the top management team. As such, the workers of Imanaka Cedenco Dairy understood that the junior staff had no part in the decision-making process. On the other hand, the Kawerau Dairy employees participated in the decision-making process. The greatest challenge, therefore, will be to bring these two cultures together and work in peace and harmony. If not careful, this merger may be in a dilemma of not knowing whether to involve the junior employees in the decision-making process or not. However, the Mana enhancement principle if adopted by the Japanese staff, it will ensure that all employees of the organization give their inputs and ideas on the matters affecting the company, therefore, contributing directly or indirectly to the decision-making.
Significance of Long-term orientation in decision-making process
Given that the Japanese managers focus on the long-term idea for developing and growing the company while the NZ managers want to achieve immediate result, this will bring conflicts if not handled correctly. NZ consumers and stakeholders are used to obtaining an almost immediate response from the business operations. The Kawerau Dairy Chief Executive Officer has to find an explanation to the consumers, suppliers, and stakeholders as to why they have engaged in achieving long-term goals as opposed to quick short-term goals. Jones (Kawerau Dairy, project coordinator) himself admits that the conversion process is a huge challenge but still they will pull through.
Significance of indirect style of communication in decision-making process
Communication is a vital aspect to reaching a successful decision-making process. The question is what happens when two organizations merge that employ different style of communication? New Zealand is a Low-context culture while Japan is a High-context culture (Hofstede, Hofstede, & Minkov, 2010). Use of the non-verbal cues by the Japan employees is likely to cause misunderstandings within the company. Kawerau Dairy employees may enumerate a totally different meaning from the non-verbal cues of the Japanese staff. This could lead to communication breakdown and loss of the essential information (Korac-Kakabadse et al., 2001). The Imanaka Cedenco Dairy should, therefore, teach themselves to use more of the verbal cues as compared to the non-verbal ones. Through this, a consensus in the decision-making process can be reached and any ambiguity removed.
Significance of Confucianism, Social Harmony, and traditional values in decision-making process
Japanese value individual and family relations more than societal relationships. Their management behavior also is ethically questionable. The NZ people value their tradition values and work for the common good of all. Therefore, there will be a huge challenge between the staff of Kawerau Dairy and Imanaka Cedenco Dairy since they all hold into different values. As such, it is going to negatively impact the decision-making process because they have different values (Carey et al., 2015). While the employees of Kawerau want to make decisions that will benefit the whole society and world at large, Imanaka managerial team what to make decisions that will only favor them and yield greater revenue and returns to the company. Therefore, it’s important for these two teams to come to an agreement regarding the process of making decisions so that the organization may gain a competitive edge over its rivals.
To enhance the communication process in a multi-cultural organization, any communication barrier that prevent efficient passage of information should be removed (Alemu, 2016). Kawerau Dairy and Imanaka are two organizations that merged to form a better organization. Nevertheless, workers of these two groups face challenges everyday especially during the decision-making process. Therefore, the senior management team of the Kawarau Dairy unit assisted by the New Zealand government implemented a technical training system that teach the foreign workers on some of the basic NZ language. The process will allow every worker to be able to communicate efficiently with the local consumers, stakeholders, and other employees (Hudlicka, 2018).
The training also will involve teaching the native workers on few of the non-verbal cues that the Japanese people use. So that there will be no discrimination in the organization and everybody to be familiar with other culture. This is crucial given that there is a high probability of meeting a client from different cultural background in the current global market. Therefore, it becomes important to know how to handle them. By so doing, it will enhance the working relations of the employees and the customers thereby increasing the company revenue.
Differences in views within the multi-cultural team
Groups of different cultural backgrounds view situations differently. This is true for Kawerau Dairy and Imanaka staff members, and it affects the decision-making process and the general management of the business. Imanaka people view themselves superior as compared to Kawerau Dairy individuals. They tend to think that they have the final word in every project. The Kawerau workers also feel they need to be involved in generating business ideas. Such conflicts can only be solved if the leaders of these two groups join hands in fighting these issues. They can unite their people by asking them to live in peace and harmony (Bhardwaj & Sharma, 2017). Through this, the workers can keep their differences aside and work to achieve a better organization.
Roles and responsibilities for the multi-cultural teams
Kawerau Dairy and Imanaka Cedenco Dairy merged to create a more powerful organization that will reach many customers. The project kicked January 2019 and it costed about $32 million. The organization provides various types of dairy products and hopes to produce organic products few months to come (Ballingall & Pambudi, 2017). They are also looking forward to developing another drier that will process sheep and goat milk as well as producing plant-based milk from butter and oats. These two teams they have agreed to work in harmony to achieve their goals.
Since a lot of challenges emerge from the cross-cultural communication, it would be necessary if the Kawerau Dairy and Imanaka Cedenco Dairy teams adopt or implement some strategies to help them achieve an effective decision-making process.
- Need for the staff of these two teams to learn, understand, and respect each other’s culture.
- The manager of various international organizations to understand how different cultural dimensions affect the business operations in a foreign land.
- Japanese workers to study the Mana enhancement principle used by the Maori entities and implement it in their business operations while in New Zealand.
- Both teams to embrace the training offered by the host nation to learn each other’s culture so that decision-making process will be effective.
The merger between the Kawerau Dairy and Imanaka Cedenco Dairy resulted into Kawerau Dairy Group. This study on the cross-cultural management has given great insights on how international companies can survive in a foreign land. It is crucial for international companies to realize there are cultural dimensions and factors that affect business operations. It’s also important for the employees of such companies to learn, understand, and respect culture of each other. In so doing, there will be no misunderstandings when communicating hence decision-making process will be efficient.
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